DENALI CAPITAL ACQUISITION CORP. References to the "Company," "our," "us" or "we" refer to
Overview
We are a blank check company incorporated as a
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Recent Developments
On
Pursuant to the Merger Agreement, the parties thereto will enter into the
Transactions, pursuant to which, among other things, immediately following the
consummation of the acquisitions by Longevity of each of
The consummation of the proposed Longevity Business Combination is subject to certain conditions as further described in the Merger Agreement.
For more information about the Merger Agreement and the proposed Longevity
Business Combination, see our Current Report on Form 8-K/A filed with the
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities fromJanuary 5, 2022 (inception) throughDecember 31, 2022 , were organizational activities, those necessary to prepare for and complete the IPO, and, subsequent to the IPO, identifying a target company for a business combination and activities in connection with the proposed Longevity Business Combination . We do not expect to generate any operating revenues until after the completion of our initial business combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the IPO. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a business combination.
For the period from
51
For the period from
Cash Flows from Operating Activities
For the period from
Cash Flows from Investing Activities
For the period from
Cash Flows from Financing Activities
For the period from
Liquidity and Capital Resources
Our liquidity needs prior to the consummation of the IPO were satisfied through
a payment from the sponsor and the loan under an unsecured promissory note from
the sponsor of up to
OnApril 11, 2022 , we consummated the IPO of 8,250,000 Units, inclusive of 750,000 Units issued pursuant to the partial exercise by the underwriters of their over-allotment option . The Units were sold at a price of$10.00 per Unit, generating gross proceeds of$82,500,000 . Simultaneously with the closing of the IPO, we consummated the sale of 510,000 Private Placement Units, inclusive of 30,000 Private Placement Units sold to the sponsor pursuant to the underwriters' partial exercise of their over-allotment option. Each whole Private Placement Unit consists of one Class A ordinary share and one warrant, each whole warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of$11.50 per share. The Private Placement Units were sold at a price of$10.00 per Private Placement Unit, generating gross proceeds of$5,100,000 .
Following the closing of the IPO and sale of the Private Placement Units on
As of
52
As of
On
As ofDecember 31, 2022 , we had a working capital deficit of$383,805 . In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (the "Working Capital Loans"). If we complete the initial business combination, we would repay such loaned amounts or convert them into equity securities as described below. In the event that the initial business combination does not close, we may use a portion of the working capital held outside of the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. Up to$1,500,000 of such loans may be convertible into units of the post-business combination entity, at a price of$10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units. As ofDecember 31, 2022 , there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that we will not have sufficient working capital and borrowing capacity to meet our needs through the consummation of the initial business combination. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
In accordance with Accounting Standards Codification ("ASC") Subtopic 205-40,
"Presentation of Financial Statement - Going Concern", the Company has evaluated
that there are certain conditions and events, considered in the aggregate, that
raise substantial doubt about the Company's ability to continue as a going
concern through
If our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of
53 Other Contractual Obligations Registration Rights
The holders of our founder shares, Private Placement Shares and Private
Placement Warrants, including any of those issued upon conversion of any Working
Capital Loans (and any Private Placement Shares issuable upon the exercise of
the Private Placement Warrants that may be issued upon conversion of any Working
Capital Loans) will be entitled to registration rights pursuant to a
registration and shareholder rights agreement signed on
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the IPO to purchase
up to 1,125,000 additional Units to cover over-allotments, if any, at the IPO
price less the underwriting discounts and commissions. The underwriters
exercised their over-allotment option in part for 750,000 Units on
The underwriters received a cash underwriting discount of
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with
Basis of Presentation
The accompanying financial statements are presented in conformity with
Emerging Growth Company Status
We are an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act . As such, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. 54
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in theFinancial Accounting Standards Board ("FASB") ASC 480 , "Distinguishing Liabilities from Equity" ("ASC 480"). Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our ordinary shares will feature certain redemption rights that are considered to be outside of our control and will be subject to the occurrence of uncertain future events. Accordingly, as ofDecember 31, 2022 , 8,250,000 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' deficit section of our audited balance sheet.
We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital or accumulated deficit if additional paid in capital equals to zero.
Warrants
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in FASB ASC 480 and FASB ASC 815, "Derivatives and Hedging" ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under FASB ASC 815, including whether the warrants are indexed to our own ordinary shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of our control, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. We account for the 8,250,000 Public Warrants and 510,000 Private Placement Warrants as equity-classified instruments.
Net Income/(Loss) Per Ordinary Share
We comply with the accounting and disclosure requirements of FASB ASC 260, "Earnings Per Share." Net loss per redeemable and non-redeemable ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding between the redeemable and non-redeemable shares during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 93,750 founder shares that were forfeited due to the underwriters' partial exercise of the over-allotment option. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less dividends paid. We then allocated the undistributed income (loss) based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares.
Subsequent measurement adjustments recorded pursuant to ASC 480-10-S99-3A
related to redeemable shares are treated in the same manner as dividends on
non-redeemable shares. Class A ordinary shares are redeemable at a price
determined by the
Trust Account
held by us. This redemption price is not considered a redemption at fair value.
Accordingly, the adjustments to the carrying amount are reflected in the
Earnings Per Share ("EPS") using the two-class method.
We have elected to apply the two-class method by treating the entire periodic
adjustment to the carrying amount of the Class A ordinary shares subject to
possible redemption like a dividend.
Based on above, any remeasurement of redemption value of the Class A ordinary
shares subject to possible redemption is considered to be dividends paid to the
public shareholders. Warrants issued are contingently exercisable (i.e.,
on the later of 30 days after the completion of the initial business combination
or 12 months from the closing of the IPO
). For EPS purpose, the warrants are anti-dilutive since they would generally
not be reflected in basic or diluted EPS until the contingency is resolved. As
of
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Recent Accounting Pronouncements
In
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 7A.
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